Tax Amnesty Windfall Brightens Indonesia's S&P Upgrade Odds,After netting more than $10 billion in revenue from its tax amnesty program, Indonesia may be a step closer to winning a much-coveted investment grade from S&P Global Ratings.

The nine-month amnesty drive, which ended on Friday, led citizens to declare 4,866 trillion rupiah ($365 billion) of assets hidden from tax authorities. The success may help Southeast Asia’s largest economy win an upgrade from S&P, according to Oversea-Chinese Banking Corp. and DBS Group Holdings Ltd.

President Joko Widodo has been pushing for an upgrade from S&P, the only main credit-rating company still keeping Indonesia at junk status. An investment grade would boost the country’s appeal among conservative Japanese institutional investors, potentially boosting inflows by $3 billion to $5 billion over the next year, Goldman Sachs Group Inc. estimated in March.

“It’s imminent that Indonesia gets back to investment grade rating," said Gundy Cahyadi, an economist at DBS in Singapore. “There has been significant improvement made on all fronts. The broadening of the tax base is going to be a plus in terms of how we look at the overall fiscal standing.”

Richard Noonan, a spokesman for S&P, declined to comment on the tax amnesty. The company in January said it may upgrade Indonesia to investment grade in 2017 or 2018 if the country delivered better spending, ensured that deficits were on a declining trend, and moderated government debt. Read More

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